Analysis: channels of remittance of waves to open on the United Arab Emirates Exchange Q1 of 2019


UAE Exchange, one of the leading global money transfer and exchange solutions, plans to implement RippleNet in its service by the first quarter of 2019. The move would make UAE Exchange the largest payment solution provider in the Middle East to use technology of Ripple.

Ripple has secured another banking partner, this time in the United Arab Emirates. The UAE exchange plans to launch cross-border remittances to Asia via Ripple by the first quarter of 2019, the UAE Exchange CEO said in an interview with Reuters:

"We expect to go live with Ripple by the first quarter of 2019 with one or two Asian banks, which is for remittances to start from around the world in Asia."

The two partner banks have not been mentioned, but those banks are likely to be in India, a country that is the largest recipient of remittances internationally. The founder of the United Arab Emirates Stock Exchange, Bavaguthu Raghuram Shetty (B.R. Shetty) has deep ties with India, and the United Arab Emirates and other Middle Eastern countries tend to have large populations of Indian migrants.

The partnership

In February, the United Arab Emirates Stock Exchange joined RippleNet, Ripple's network of business blocks of over 100 banks and financial institutions. According to a Ripple press release, the partnership would allow UAE Exchange to provide real-time messaging, clearing and settlement of financial transactions for global banking and payment partners. These changes would provide UAE Exchange customers with an advanced payment experience and competitive rates, speed, transparency and efficiency, as stated in the press release.

Dilip Rao, Ripple's Global Head of Infrastructure Innovation, said:

"We have chosen to focus on solving inefficiencies in key corridors where payment flows are significant and growing." The addition of a market leader such as UAE Exchange to RippleNet will bring immediate, certain and low-cost payments to the millions of retail clients in the United Arab Emirates who send money abroad ".

Promoth Manghat, CEO of UAE Exchange, is optimistic about how the integration will make the company more competitive:

"The early adoption of this revolutionary technology allows us to offer a competitive service, as it will have an impact on the speed and cost of cross-border transactions and we are proud to offer the future of payments with Ripple."

Background on the UAE exchange

The UAE exchange is part of the Finablr group, a global conglomerate of payment and exchange solutions. In addition to the UAE exchange, the group also includes Xpress Money and Travelex.

The company was founded by the Indian billionaire B.R. Shetty. Shetty founded the United Arab Emirates in 1980 in an attempt to facilitate the process for expats who send money to their families and their respective countries of origin.

By 2016, the United Arab Emirates has expanded to over 31 countries and has around 800 direct offices. In 2014 it made over $ 50 billion in remittances and trading volumes.

In a statement on the history of the United Arab Emirates by Shetty, reported by Emirates 24/7:

"The company has not just turned, but the United Arab Emirates is today one of the most successful money trading companies that represent a large share of remittances annually in India, with approximately 750 direct offices in 32 countries, employing 9,000 multinational employees. and is aimed at 20 million customers every year ".

Remittances globally and in the United Arab Emirates

According to a World Bank report, approximately $ 690 billion of remittances are made globally, an increase of 10% over last year. The United Arab Emirates hosts a large population of expatriates and migrant workers.

The Migration Policy Institute estimates that 90% of the UAE's workforce comes from India, Pakistan or Bangladesh, with many of these workers sending remittances to their families at home. India is the largest receiver in the world of these remittances globally, receiving over 80 billion dollars in 2018.

State of remittance industry

According to the World Bank's world price database, the cost of sending a remittance to a medium-low income country is estimated at a whopping 7.1 percent. A service like Ripple's could significantly reduce the cost of these transactions, allowing migrant workers to send more money home to their families and to stimulate these developing economies.

Currently, most remittances are via conventional channel agents, such as Western Union, Ria Money Transfer, MoneyGram and UAE Exchange. The rest of the market is fragmented, with smaller players being crushed, increasing regulatory costs and compliance requirements. However, with the proliferation of Internet access, online and mobile payments have grown considerably. This increase offers a perfect opportunity for the implementation of cryptocurrency-based payments.

Even the World Bank considers blockchain and cryptocurrency as a potential tool to increase availability and reduce the cost of international remittances:

"In the medium-close, technology [of blockchain] can be applied to reduce infrastructure costs … for cross-border payments and regulatory compliance … Smart blockchain contracts can help you create a simplified payment system by eliminating physical documentation and automating contract execution . This has the potential to significantly reduce remittance costs. "

That said, Manghat points out that more work is needed before Ripple and other blockchain remission technologies are ready for the general public:

"Blockchain is an incredible promise for the industry, but there is progress to be made before seeing it go completely mainstream …"

Although there is no direct mention of Ripple regarding remittances, the company is probably the most ready to conquer the market. At the moment, Bitcoin controls remittances based on cryptocurrency, with the highest volume in terms of dollars transferred on a daily basis. That said, due to comparatively high commissions, longer transaction times and poor development speeds than other projects, Ripple is said to have the qualities to overcome Bitcoin.

Considering Ripple's network of institutional partners and the deep pool of finance to draw upon, the company could potentially dominate remittances based on cryptography and interbank payments. Right now, the company is only starting to beat markets like the United Arab Emirates. However, as Ripple gains more traction and access to larger markets, it is possible that it can compete with the ubiquitous or even successful SWIFT banking system.

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